JERSEY CITY, NJ - What makes an industrial property a good site for a data center? According to Cushman & Wakefield, Inc.'s Sean Brady, a number of variables come into play. A senior director with the commercial real estate services firm's East Rutherford, N.J., office and co-founder of its Global Data Center Advisory Group, Brady addressed this topic for attendees of the Northeast Industrial Real Estate Summit. Produced by CapRate Events, the program was held at Maritime Park in Jersey City. In the following Q&A interview, he reviews the evaluation process.

What are the most important characteristics of a top-rated data center?

Brady: Tier 3 or 4 data centers - which are the highest classifications - require superior power and fiber redundancy, as well as high security. These represent the most critical issues today. The buildings, themselves, need to have at least 11 additional characteristics to meet Tier 3 or 4 Data Center status, including:

•Distance from major transportation routes like a flight path or exposure to major highways

Are there exceptions to the rule?

Brady: You may see some Fortune/Financial 100 data centers that don't meet these characteristics because they are legacy sites, but times have changed. Past and recent experiences from Irene, Sandy and security breaches have created more criteria to be met.

Urban, multi-story office or industrial buildings have been used as data centers in the past but are not popular today. Frankly, the only prospects that will consider them are collocation providers looking to serve clients within that particular city. First, the cost to run and operate suburban locations is lower, which has driven up demand. Second, some of those "ideal" data center characteristics at urban properties are harder to come by and control because of the tenants above and below you, building restrictions and limitations, environmental codes, city utility restrictions, and other factors.

What defines "good power" when considering an industrial-to-data center conversion?

Brady: Bringing power to a site is expensive and takes time. If the property already has one to two megawatts at 13.2 volts on-site, that is a good start. Having 26kV or 69kV substation on-site with an existing substation is even better.

The most cost-effective way to increase capacity is to request more power on current 13.2 kV lines, which provide residential-grade power. If the existing line is maxed out, the next most cost-effective way may be to tap into additional power from another 13.2 kV line close to the property.

Once all 13.2 kV options have been exhausted, then it becomes necessary to consider 26 or 69 kV. If a site requires five to 20 megawatts of power, most utilities will mandate a move to these higher, industrial-grade services - which require small onsite substations. This voltage is very stable, and the substations are designed with an A and B side, so if one side goes down the other can carry the entire building load. However, the cost to build a 26 or 69 kV substation ranges from $2.5 million to $6.5 million, and it can take nine to 18 months to complete.

Similarly, what constitutes "good fiber?"

Brady: Data center users want access to as many fiber providers as possible, as this creates redundancy and pricing competition. There are more than 30 fiber providers in the market today and they typically run lines along railroads and major highways. Bringing fiber to a building usually takes four to nine months and can be expensive. That said, if high user demand exists, providers may bring it in more quickly and sometimes for free.

Who are typical data center users, and do their needs differ?

Brady: Data center users fall into three categories:

•Those who lease space in a particular market, including enterprise (corporate-owned) centers;

•Wholesale operators, that build the warm shells and lease the space to enterprise or collocation users who come in and operate their own servers; and

•Third-party operators that offer collocation, managed services and Cloud service. They run the data center and manage racked servers for their clients.

All three will have different locational and image needs but most all will have similar basic power and fiber needs for redundancy.

In terms of location, why has New Jersey become such a popular data center market?

The Northern New Jersey data center market extends from southern Rockland County, N.Y., down to Newark; more than 1.5 million square feet of new product has been delivered there in the past nine months alone. The Southern New Jersey market extends from Union and northern Middlesex County to Bridgewater in Somerset County and west, to I-287.

These two areas are the most popular concentration of data centers because power there is the cheapest in the tri-state area (Northern New Jersey has the best cost per kWh and is served by three major providers - PSEG, O&R/ConEd and JCP&L). Additionally, its fiber network is the region's best and most diverse.

New Jersey has become a data center hub for other reasons as well. It has one of the strongest engineering/IT workforces, great roads and a top-ranked mass transit system. Then there is the not-so-small factor of its location adjacent to 330 million square feet of office tenants and Wall Street in New York City. The result? Approximately 6.3 million gross square feet of third-party data center space - a number that is still growing.